Tiny town lands tiny technology startup

1of4﻿Mahesh Patel, CEO, president and founder of ShayoNano, a ﻿nanotechnology company with its U.S. headquarters in Stafford, ﻿hopes to succeed in an industry where others have failed. ﻿Photo: Yi-Chin Lee, Staff

2of4﻿ShayoNano produces a nanomaterial used to enhance the efficiency of common paint.﻿Photo: Yi-Chin Lee, Staff

3of4Hahesh Patel, CEO, president and founder of ShayoNano, a Singapore-based company, gives a tour of the company's nano material production plant at their U.S. headquarters Tuesday, July 25, 2017, in Stafford. ( Yi-Chin Lee / Houston Chronicle )Photo: Yi-Chin Lee, Staff

4of4Miguel Escamilla Jr., mannufacturing manager of ShayoNano, demonstrates the operation of programmable logic controller at the company's production plant Tuesday, July 25, 2017, in Stafford. The Singapore-based company chose Stafford to be their U.S. headquarters. ( Yi-Chin Lee / Houston Chronicle )Photo: Yi-Chin Lee, Staff

It's not every day that a tiny Texas town lands a nanotechnology company, but Stafford is now home to an operation that aims to churn out whole new generations of materials created on the molecular level.

Indian-born entrepreneur Mahesh Patel started his company, ShayoNano, and produced his first 300-pound batch of a nanomaterial used to enhance the efficiency of common paint earlier this year. It was a milestone in a 25-year journey, including nine years the chemical engineer had spent in Singapore, searching for the perfect spot to set up in America.

"Nanotechnology is waiting for a success story," he said. "That would be the kind of story we'll create in the next years."

The first product off the production line is dubbed SmartHide, a lower-cost substitute for titanium dioxide, a crucial component of paint, which boosts opacity and other qualities.

Inside the facility, innumerable pipes and cables connect an array of shimmering pressurized vats, each linked to a touchscreen. The setup, which Patel describes as proprietary technology, can produce up to 5 tons of product per day.

By beginning production, ShayoNano has already gotten much further than most nanomaterial startups.

Nanotechnology has been under development in its modern form for more than 30 years, and it's been worked into ubiquitous applications, often unbeknownst to consumers. But experts in the field say the sector is still waiting for its heyday.

"I think that the real opportunity for nanotech has not been realized yet," said Lisa Friedersdorf, director of the National Nanotechnology Coordination Office.

"We're starting to see things moving in that direction, but we certainly are not done yet."

Houston laboratories played a crucial role in the early development of nanomaterials and Houston has struggled to nurture a tech scene, yet nano still hasn't taken off.

A handful of startup companies have cropped up, exhausted investor funding and fizzled. A few remain on shaky footing.

"I don't know exactly why it hasn't taken off," said Nick Tillman, director of energy acceleration at the Houston Technology Center. "It definitely has local promise. That would be something to set Houston apart."

One in a millionth

Decades ago, technology evolved dramatically when scientists learned to engineer on the microscale, one-millionth of a meter, to produce microchips. Nanoscale is a thousand times smaller - one-billionth of a meter - and it represents a realm where many substances are in atomic or molecular form. By engineering particles on the nanoscale, scientists can design attributes of the bulk material.

Modern nanoscience emerged in the 1980s and 1990s, propelled largely by Nobel Prize-winning research from Rice University, which found the first novel ways that atomic carbon could be assembled, dubbed buckyballs.

"Nano didn't take off in the same way that venture capitalists thought it would," said Andrew Barron, a nanomaterials researcher at Rice University. "Just because you make a material doesn't mean anyone wants to use it."

Many promising ventures in nanomaterials have taken flight and quickly crashed, said Shay Curran, director of the University of Houston's Institute for NanoEnergy and owner of a small nanomaterials company, Integricote.

While researchers turned out novel and sophisticated products, they struggled to make it marketable or profitable. In other cases, scientists lacked business savvy and may have misrepresented the time needed to develop a working prototype as the time needed to bring a product to market.

"You weren't necessarily going to have a product in three to five years," Curran said. "It takes a lot of time. People became disillusioned with nano."

For example, Konarka brought in about $250 million in grants and investor funds, promising plastic solar cells that were never commercialized. It folded.

At least two startup nano ventures spun off of research out of Rice University, Curran said, but never made it off the ground.

"There have not been that many successful nanomaterial companies," he said.

Innovation in nanotechnology has gravitated to the East and West coasts, he said, largely because academic institutions there provide researchers with ample funding and access to venture capital.

Going macro with nano

Patel, the CEO of ShayoNano, hopes to succeed where others have failed. He got his start in nanoscience more than two decades ago when, as a second-year chemical engineering student at a university in Mumbai, he won a prize for making a working prototype of a fuel cell in 1992.

ShayoNano was Patel's fledgling endeavor in 2007 when an economic development arm of the Singaporean government invited him to relocate to the small island city-state. With investor funding, he built a lab and spent nine years developing products based on nanotechnology.

"They had good faith in us, and they kept investing money," Patel said.

He sensed the time to begin production was near, and aimed to open a facility in the U.S. He didn't know exactly where. So he took a road trip.

Alone in a rental car, Patel drove from Austin to Miami, meeting with economic development offices along the way in search of a place to settle down.

He liked Houston for its port and its airport with nonstop flights to Asia, but Patel wasn't just looking for a place to do business. He wanted a place to live. Behind the scenes, he had a researcher crunching numbers.

His 14-year-old son in Singapore had tracked down data on school quality and neighborhood crime rates, identifying the Sugar Land area as a prime place to grow up.

Patel was elated with the area's large Hindu community, and with the Shree Swaminarayan Mandir temple, which was crafted from stone in India, then imported and set up just outside Stafford in 2004.

He nabbed a temporary spot downtown in the Houston Technology Center, a startup incubator, in 2015, and moved to a small office in Stafford by the year's end.

"A little town like Stafford doesn't get nanotechnology very often," said Patti Worfe, economic development director for the city of Stafford. "We're very excited."

The custom production hardware began arriving in Stafford in May, and the operation came on line late July.

ShayoNano has a handful of patented products developed in its lab. One material captures carbon emissions, others capture impurities in water, extract beta-carotene from palm oil, absorb oil from water, prevent paper from burning or protect plastic from ultraviolet rays.

Patel sold his first batch of SmartHide to a small-scale paint manufacturer. He claimed that larger producers have already expressed interest but would require a batch of product larger than his current facility can turn out. By jumping straight to large-scale production, he hopes to sell in bulk to big customers.

Since ShayoNano moved into its small Stafford office, it has been working with the city to find space for a much larger production facility - 100,000 square feet or larger.

"We continue to look for a substantially bigger building for them," Worfe said. "If the production on this product really takes off, they could start needing additional space very quickly."